Recent years have seen house prices rise sharply; the abolition of mortgage interest tax relief; increases in the cost of buying property and rising levels of student debt after graduation. The number of first-time buyers is at its lowest level for around 20 years and Nationwide believes many need urgent help to make their first step onto the housing ladder.
House prices for first-time buyers have increased by 18% every year for the past three years. In that time, average earnings have increased by just 4% per annum. The first rung of the property ladder is getting further out of reach every year for more and more people. The typical first-time buyer is now 31 years old, compared with 27 in 1992.
Nationwide's special report on stamp duty* shows that first-time buyers taking out a mortgage pay around £700 million in stamp duty - 19% of the total raised by the Inland Revenue through stamp duty each year. Government revenue raised through stamp duty on residential properties has more than trebled over the last four years to around £3.6bn. Nationwide's proposals - abolishing stamp duty on properties up to £150,000 - would cost the Inland Revenue £280 million - just 8% of the amount currently raised from home buyers.
If stamp duty had been index linked from 1993 it would now begin at £150,000, not £60,000 as at present and 80% of first-time buyers would be exempt from this additional tax. 75% of first-time buyers now pay stamp duty compared with 40% five years ago and only 18% in 1993.
Nationwide director, Stuart Bernau, said: "The figures speak for themselves, first time buyers are struggling to get their feet on the first rung of the housing ladder. It's time to give first time buyers a break, they have seen the costs of setting up their own home soar and for many stamp duty is the final straw.
"Everyone deserves a first chance to own their own home. This is a great opportunity for the government to lead the way in treating first-time buyers fairly."
